Rokos v Campbell HC Auckland CIV 2010-404-3754
[2010] NZHC 1924
•28 October 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-3754
UNDER the Land Transfer Act 1952
IN THE MATTER OF an application to sustain caveats
BETWEEN PATRIK ROKOS Applicant
ANDCHRISTINE SHEILA CAMPBELL Respondent
CIV-2010-404-3756
AND UNDER the Land Transfer Act 1952
IN THE MATTER OF applications to sustain caveats
BETWEEN PATRIK ROKOS Applicant
ANDPIPPA JANE FLEMING AND DAVID NEIL MURRAY
Respondents
CIV-2010-404-3759
AND UNDER the Land Transfer Act 1952
IN THE MATTER OF applications to sustain caveats
BETWEEN PATRIK ROKOS Applicant
ANDMARGARET WONG AND ROBERT FOY WONG
Respondents
ROKOS V CAMPBELL HC AK CIV-2010-404-3754 28 October 2010
Hearing: On the Papers
Counsel: A Stutt for Applicant
K J Crossland for Respondents Campbell and Wong
J Armstrong for Respondents Fleming and Murray
Judgment: 28 October 2010
JUDGMENT OF COOPER J ON COSTS
This judgment was delivered by Justice Cooper on
28 October 2010 at 4.00p.m., pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors:
Neilsen Law, PO Box 1108, Hamilton
Stace Hammond, PO Box 19 101, Hamilton
Armstrong Murray, PO Box 33 1028, North Shore City 0740
Copy to:G L Wilkin, PO Box 1394, Waikato Mail Centre, Hamilton 3240
2
[1] On 6 August 2010 I delivered a judgment dismissing three originating applications made by Mr Rokos seeking to sustain a caveat under s 145A(3) of the Land Transfer Act 1952. I held that the respondents were entitled to their costs calculated in accordance with category 2 and band B.
[2] Subsequently, Mr Crossland who acted for the respondents Campbell and Wong, sought leave to make submissions for an award of “above scale costs”. In a minute that I issued on 16 August, I indicated that I would receive memoranda. The solicitors acting for the respondents Fleming and Murray are evidently content with the scale costs awarded. Mr Crossland, however, urges that the Court make an award of either indemnity costs or increased costs in favour of his clients.
[3] In order to discuss the claim for additional costs some brief context is appropriate.
[4] As recorded in my judgment of 6 August 2010, Mr Rokos asserted that he had an interest in three properties, each of which was the subject of an application that he made against the registered proprietors of the properties seeking orders that caveats not lapse. The basis of Mr Rokos’ claim was that he had entered into agreements for purchase with the respective respondents in relation to the properties. The respondents denied that Mr Rokos had any interest pursuant to the agreements for sale and purchase. They asserted that their contracts were with BRNO Developments Ltd, a company that was incorporated on 27 April 2006, and which it was claimed had ratified the agreements. It was their claim that the agreements were enforceable by and against the company under s 182(3) of the Companies Act 1993 as if the company had been a party to the agreements from the outset. In all three agreements, the purchaser had been described as “BRNO Developments or Nominee”. BRNO Developments Ltd was not formed until a little over eight months after execution of the agreements.
[5] I rejected Mr Rokos’ application having reviewed correspondence and draft agreements which had emanated from successive firms of solicitors acting for him, which had proceeded on the basis that BRNO Developments Ltd was indeed the purchaser under the agreements for sale and purchase. I rejected as not credible
various factual assertions made by Mr Rokos attempting to explain away the clear conclusion that was to be reached by reviewing the correspondence.
[6] In essence, Mr Crossland now seeks indemnity or increased costs on behalf of the respondents for whom he acts on the basis that the position was plain from the correspondence and draft documents that I had referred to in the judgment. Further, the position had been summarised at an early stage in correspondence addressed by Mr Crossland’s firm to counsel instructed for Mr Rokos. For example, Mr Crossland’s letter of 24 June 2010 to Mr O’Neill contained the following:
6. The short point is that at all material times after the incorporation of the company (which paid the deposits on the properties) these contracts were unswervingly treated by Mr Rokos and his wife as contracts of the company. Indeed this firm after the company got into liquidation and whilst representing the liquidators spent many months in dealings with Brookfields. Those dealings covered initially a claim by Mr Rokos that the benefits of the contracts were his by reason of deeds of nominations signed by Ms Rokossova as director of Brno Developments and he as the nominee (copy enclosed). Those deeds were rejected by the liquidators.
7. Once Mr Rokos understood the liquidators were not going to honour the deed of nominations we and Brookfield entered into negotiations over several months for Mr Rokos to take an assignment of those contracts for an agreed price. This culminated in another deed which the liquidators and Mr Rokos agreed to and which Brookfields then put forward to the existing vendors of the properties to try and get them to sign it. The contents of that deed again proceeds on the basis that the purchasers under those contracts was Brno (copy enclosed). None of this would have been necessary or undertaken by Mr Rokos if he was always the purchaser anyway. He never once mentioned this. The vendors did not wish to sign and Mr Rokos was unable to get finance to purchase the benefit of the contracts from the liquidators. It was only after the liquidators then took steps to remarket the properties that Mr Rokos lodged his second lot of caveats (though he did not tell the liquidators about what he had done).
8. We have folders of evidence which you are most welcome to come and inspect to verify what we are saying for yourself. The liquidators do not consider that the contents of Mr Rokos’ affidavit are accurate. We hold concerns that he has not put information into his affidavit that is relevant and which the Court would have every expectation to have been disclosed. It may be in his interests for him to take further advice from you after you have reviewed the evidence we hold over any other ramifications you might see arising from his affidavit.
9. We will be in the interim prepare[sic] and file notice of opposition on behalf of the two respondents we are representing. Enclosed is a suggested draft consent memorandum to sustain the two caveats pending your decision whether to review the evidence we hold and for you to do that. We would like you to do that by the middle of next week because we are
trying to avoid the respondents and liquidators incurring further costs in preparing what will be comprehensive affidavits if need be. This is intended as a short opportunity for Mr Rokos to rethink his position. If the offer to inspect is not taken up promptly we will prepare the affidavits and deal with the matter under urgency. There are other purchasers for these properties from the liquidators and those funds are needed to pay creditors of Brno in the liquidation.
10. If after your review of the evidence Mr Rokos decides to discontinue we will need to discuss the question of costs. If the matter proceeds to having to be decided by the Court we will be submitting on behalf of the respondents that costs be ordered on an actual basis. The liquidators also will have been put to additional cost which ultimately comes out of the amount available for unsecured creditors (which these contracts are central to providing a return) and they may also seek damages.
[7] Notwithstanding the content of that letter, Mr Rokos proceeded with the present application. Mr Crossland now submits that “increased costs up to actual” should be awarded against Mr Rokos because he:
a) took an argument that lacked merit; and
b) failed without reasonable justification to accept a legal argument; and c) failed without reasonable justification to accept an offer to settle or
otherwise dispose of the proceedings; and
d)acted improperly and unnecessarily in commencing and continuing the proceedings.
[8] He submitted that the circumstances of the case warranted the award of either increased or indemnity costs.
[9] The issues raised are really those set out in r 14.6(3)(b) as justifying an award of increased costs. Mr Crossland has not specifically addressed the matters referred to in r 14.6(4) as justifying an award of indemnity costs.
[10] Mr Stutt submits that having awarded costs on a category 2B basis in the judgment, it would not be appropriate now to entertain an argument for increased costs. I do not consider that there is a jurisdictional bar to doing so and Mr Stutt has
not pointed me to any authority to that effect. However, he has also addressed the merits of Mr Crossland’s argument and claims that there is no basis to award increased costs. He asserts that the real basis upon which the judgment proceeded was one of estoppel, that had not been raised by the respondents prior to the hearing; that the respondents’ solicitor’s letter of 24 June 2010 was not properly to be regarded as an offer to dispose of the proceedings and that Mr Rokos had not acted improperly or unnecessarily in bringing his applications. He submitted that there was nothing in the circumstances of this case which would justify departure from the scale.
[11] I accept that the letter of 24 June 2010 cannot properly be described as an offer to dispose of the proceedings. On its face, it was really an invitation to Mr Rokos to discontinue his applications, as well as paying an amount for costs.
[12] However, I consider that the respondents can properly argue that the applicant pursued an argument that lacked merit, and failed without reasonable justification to accept the arguments that were traversed in Mr Crossland’s letter of
24 June 2010 which inevitably meant that the applications to sustain the caveat must fail. While it is correct that, in argument, I raised the issue of estoppel directly, and that argument was not set out in the letter of 24 June 2010, the issue of estoppel was indeed raised in the notice of opposition filed on 25 June 2010, based amongst other things on the existence of the nomination deed. Moreover, Mr Crossland’s letter referred also to the extensive files of the previous solicitors who had acted for Mr Rokos and made the assertion that “at all material times after the incorporation of the company … these contracts were unswervingly treated by Mr Rokos and his wife as contracts of the company”.
[13] That statement was accurate and it meant that in endeavouring to assert a position which was contrary to plain documentary evidence, Mr Rokos took an argument that lacked merit.
[14] I note that the respondents Fleming and Murray have not sought increased costs. That probably reflects the impression I had as a result of the hearing, that counsel for those parties had adopted a less prominent role in opposition to the
applications. Although Mr Stutt submitted it was significant that the other respondents had not sought increased or indemnity costs, I do not consider that that should stand in the way of an award of increased costs for those parties who have sought it.
[15] In my view, the respondents Campbell and Wong are entitled to increased costs.
[16] If costs were awarded to each of the parties for whom Mr Crossland acts on the basis of category2 band B, I accept Mr Crossland’s calculation that the award would be $6,956 in each case. However, he acknowledges that that would not be appropriate given that both parties combined to instruct one firm. In order to reflect that, he has suggested that there be an uplift to reflect the fact that there were two separate parties of, ten per cent. I consider the fair way to proceed is to adopt a starting point of $7,650 (to reflect the fact that there were two parties entitled to costs) and for there to be an uplift on that sum to reflect my determination that the respondents are entitled to increased costs.
[17] In accordance with what was said in Holdfast NZ Ltd v Selleys Pty Ltd[1] I direct that there be a 50 per cent uplift with the result that the applicant must pay costs to the respondent C S Campbell, and M & R F Wong in the total amount of
[1] Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNC 897
$11,475.
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